Submit invoice details
Provide eligible invoice information, customer details and evidence of delivery or completion.
BUSINESS FINANCING · CANADA & USA
Invoice & Freight Factoring
Turn eligible unpaid business or freight invoices into operating cash while understanding fees and collection responsibilities.
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What is invoice and freight factoring?
Invoice factoring involves selling eligible unpaid invoices to a financing provider. You may receive an initial advance, with a reserve released after customer payment, less agreed charges. Freight factoring applies this structure to transportation invoices; delivery records support verification of the completed work.
Illustrative example: A carrier has delivered a load but must pay fuel and driver costs before its customer pays. Factoring may address that timing gap. The decision should account for fees, customer notification and responsibility for an unpaid or disputed invoice.
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Trucking & freight carriers
Present freight invoices with the required delivery records and customer details.
Staffing & commercial services
Support an invoice review with evidence that the agreed services were completed and accepted.
Manufacturing & wholesale
Provide invoice, shipment and customer information, including returns or offsets that could reduce collections.
Construction & trade work
Identify progress billing, holdbacks and disputes. These can affect invoice eligibility and require separate review.
Follow the invoice from delivery to customer payment
An invoice must represent a verifiable transaction
Factoring focuses on eligible receivables rather than simply the amount printed on an invoice. The work or delivery, customer details, payment terms and supporting records need to be understood. Disputes, offsets, credits or incomplete performance can affect eligibility. In freight, a bill of lading and proof of delivery can support the invoice, but a transport document alone is not the same as an accepted receivable.
Illustrative example: advance and reserve
Suppose an eligible $10,000 invoice receives an illustrative $8,000 advance, with $2,000 held as a reserve. If the customer pays the full invoice and the agreed fee is $250, the remaining release would be $1,750, assuming no other deductions. These invented figures demonstrate the sequence only; they are not quoted advance rates or fees. A reserve is not automatically an additional financing charge.
Know where the customer sends payment
Confirm the payment instructions and how customers will be notified of an assignment or change in collection arrangements. Your billing team needs to understand what to do if a customer pays the business directly or disputes the invoice. Clear communication matters because the financing process touches the customer relationship. Ask who handles collection follow-up and how account questions are escalated.
Who can qualify for invoice & freight factoring?
Businesses invoicing commercial customers on payment terms may be candidates. Review focuses on the receivables and customer payment profile as well as the business, disputes, existing liens and supporting records. A bill of lading or delivery slip supports an invoice; it is not itself the receivable being financed.
Available options depend on your business location in Canada or the USA. Include the province or state, transaction currency and any cross-border activity in your request.
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The process, step by step.
Review verification & terms
Discuss customer verification, fees, reserves, recourse and collection arrangements.
Complete the arrangement
If approved, satisfy the agreement conditions. Advances and reserve releases follow the agreed process.
What should you compare before proceeding?
Advance & reserve
Review what is advanced, what is retained and when the reserve is released.
Fees & collection timing
Compare charges at different customer payment dates, including minimums and additional fees.
Recourse & customer contact
Confirm responsibility for unpaid or disputed invoices and who communicates with customers.
What makes receivables suitable for review?
Customer quality and concentration
A large invoice from one customer does not have the same risk profile as a diversified group of receivables. Provide an aging report showing invoice dates, due dates, balances and customer concentrations. Identify related-party sales and recurring disputes. Customer payment ability is important, but it does not remove the need to review the business, the underlying transaction and the proposed agreement.
Freight and B2B documentation
Prepare invoices, purchase orders or contracts where relevant, and evidence that goods or services were delivered. Freight files may require delivery records and confirmation of the party responsible for payment. Explain whether you are the carrier, broker or another service provider. The documents must support the actual invoicing relationship, not merely show that a shipment or job took place.
Existing claims and cross-border invoices
Disclose any existing financing secured by receivables and any restrictions you know of in customer contracts. Identify the invoicing entity, customer location and currency, especially for Canada–USA trade. These details can affect verification and structure. Do not assume an invoice is eligible simply because the customer is in one of the countries Mehmi serves; each account and transaction needs review.
Compare factoring agreements beyond the headline fee
Understand recourse and exclusions
Ask what happens if the customer pays late, becomes insolvent or disputes the goods or service. Recourse provisions may require the business to repurchase or otherwise settle an unpaid invoice. Non-recourse wording does not necessarily cover every reason for non-payment. Review the specific covered risks, exclusions and time limits rather than treating either label as a complete description of protection.
Model a delayed payment
Determine whether fees change with the time an invoice remains outstanding and whether minimums or additional charges apply. Compare the cost if a customer pays on time with the cost if payment is delayed. Check reserve release timing, termination provisions and any requirement to submit a minimum volume or particular group of invoices. These details influence both the cost and day-to-day administration.
Protect the margin on the work
Compare the financing cost with the margin on the invoice, not just its face value. Factoring may address collection timing, but it does not improve the profitability of an underpriced job. If the main need is funding work before an invoice exists, explain that separately. Working capital financing or another structure may be more relevant than a product based on completed, eligible receivables.
What should your billing team check before submitting an invoice?
Verify the customer’s legal name, invoice number, amount, payment terms and supporting delivery or service records. Resolve duplicate invoices, unapplied credits and known disputes before submission. Confirm that the invoice has not already been assigned under another arrangement. Keep a record of customer communication and explain any unusual payment instructions through the agreed process. These checks help prevent avoidable reconciliation problems, but they do not establish automatic eligibility. The proposed provider still needs to verify the account and transaction. Accurate billing also helps you distinguish a collection delay that financing may address from a commercial dispute that needs to be resolved directly.
Invoice & Freight Factoring compared with other options
Compare
Invoice & Freight Factoring
Business Line of Credit
Working Capital Loans
Primary purpose
Eligible unpaid customer invoices
Recurring operating cash needs
Defined operating cash requirement
Repayment / cash flow
Collections, reserves and recourse under the agreement
Draw, repay and potentially reuse within conditions
Agreed payments from business cash flow
Main review focus
Invoice validity and customer payment profile
Financial records and facility eligibility
Revenue, obligations and intended use
Costs to compare
Advance, reserve, fees and collection-related charges
Net proceeds, interest or financing charges, fees and total repayment
Net proceeds, interest or financing charges, fees and total repayment
General comparison only. Availability, security and final conditions vary by business, product and location. On smaller screens, scroll the comparison horizontally.
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Explore industry →Frequently asked questions
Does factoring eliminate all non-payment risk?
No. Recourse, disputes, offsets and exclusions depend on the agreement. Review the risks retained by your business.
Will my customers be contacted?
Invoice verification, notification and payment routing depend on the arrangement. Confirm the process before proceeding.
Can I factor overdue or disputed invoices?
Eligibility varies. Aging, disputes, related-party invoices and incomplete delivery can affect acceptance.
How is factoring different from a business loan?
Factoring is tied to the sale and collection of eligible invoices. A business loan generally creates a repayment schedule for borrowed funds. Factoring still has costs and contractual obligations, including any recourse if an invoice is not paid.
Is this available in Canada and the USA?
Mehmi accepts financing enquiries from businesses in Canada and the United States. Include your province or state, business activity and transaction currency. Available structures and requirements vary by location and request.
What should I compare before accepting an offer?
Compare the total amount payable, upfront cash, payment frequency, security, personal guarantees and early-settlement terms. Check what happens at the end of the agreement and whether the payments remain manageable in a slower month.
Financing guides for your next step.
CANADIAN FINANCING GUIDE
Invoice Factoring in Canada: Costs & Approval
Explore the considerations, documents and contract questions for this financing topic.
Read article →CANADIAN FINANCING GUIDE
Asset-Based Lending in Canada for SMEs
Explore the considerations, documents and contract questions for this financing topic.
Read article →Tell us what your business needs.
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Apply for financingFinancing is subject to application review and approval. Availability, costs, terms and documentation vary by business, product and location. This page provides general information and is not a financing offer.